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The Collapse of Signature Bank & Silicon Valley Bank - Implications for the US Banking Sector

The recent collapse of Signature Bank and Silicon Valley Bank has sent shockwaves through the US banking sector. These two well-established banks had a significant presence in the industry, serving many clients, from small businesses to large corporations. However, their collapse has raised concerns about the country’s financial institutions’ stability. In this article, we explore what led to the collapse of these two banks, what it means for depositors and shareholders, and the broader implications for the US economy.

What Led to the Collapse of Signature Bank and Silicon Valley Bank?


What Led to the Collapse of Signature Bank and Silicon Valley Bank

At the end of the previous year, Signature Bank had $110.36 billion in assets and $88.59 in deposits. As of September, about a quarter of its deposits came from the cryptocurrency industry, but the bank declared in December that it would reduce such deposits by $8 billion. Contrastingly, Silicon Valley Bank, which specializes in startups, was the 16th largest lender in the US. After consumer withdrawals, it failed, wiping off billions in deposits.

What Does It Mean for Depositors and Shareholders?


What Does It Mean for Depositors and Shareholders

The US Treasury Department and other bank authorities issued a combined statement guaranteeing that all Signature Bank and Silicon Valley Bank depositors will be compensated in full and that the government will not bear any losses. However, the top management of both banks has been fired, and shareholders and certain unsecured debt holders of both banks won’t be protected. As required by law, any losses to the FDIC’s Deposit Insurance Fund that were utilized to help uninsured depositors will be made up by a special levy on banks.

What Does It Mean for the Banking Industry?


What Does It Mean for the Banking Industry

The collapse of these two banks has raised concerns about the banking industry’s stability and prompted swift action from government officials to try and restore confidence. The episode has also erased more than $100 billion in market value from US banks, which could impact the industry’s future. Moreover, the collapse of Signature Bank has raised concerns about banks’ exposure to the cryptocurrency sector.

Implications for the US Economy


Implications for the US Economy

The collapse of Signature Bank and Silicon Valley Bank could have wider implications for the US economy as a whole. Both banks served as a critical source of funding for small businesses, including those driving the innovation economy, and their failure could undermine the growth prospects of these businesses. In addition, many experts believe that the recent events are a warning sign that the US banking sector may be more vulnerable than previously thought and that more failures could be on the horizon.

If you need some ideas about what to read next, here they are:


What Needs to Be Done?

The US government has taken swift action to restore confidence in the financial system by establishing a “bridge” successor bank and announcing actions to shore up deposits. However, some analysts argue that these measures may not be enough to prevent further failures in the banking sector. To address the systemic weaknesses that have made the banking sector vulnerable to collapse, it is essential to ensure that depositors and borrowers are protected and small businesses are provided with the necessary support to weather the current economic turbulence.

A Brief History Of Signature Bank


What Needs to Be Done

Signature Bank was founded in 2001 by former Republic National Bank of New York employees, targeting wealthy clients and middle-market business managers. It quickly became profitable and grew to $950 million in assets within 20 months of opening.

The bank completed its IPO in 2004 and continued to expand rapidly, becoming one of the fastest-growing public companies in New York. It also expanded into other business areas, including multifamily lending, equipment finance, and law firm servicing.

Despite losses associated with medallion loans, the bank continued to post profits, and its assets approached $50 billion by 2017. In 2018, the bank expanded to the West Coast, and in 2019, it began operations in North Carolina by luring a group of high-profile bankers from the former Square 1 Bank.

Ending Thoughts


A Brief History Of Signature Bank

The latest collapse of Signature Bank and Silicon Valley Bank has raised serious concerns about the stability of the US banking industry, particularly in light of the risks posed by the cryptocurrency sector and the broader economic challenges facing the country. While the government has taken steps to restore confidence in the financial system, including establishing a “bridge” successor bank, more must be done to address the systemic weaknesses that have made the banking sector vulnerable to collapse.

The government, regulators, and industry leaders must work together to strengthen the banking system and prevent future failures. This may involve implementing stricter regulations, increasing transparency, and promoting greater accountability in the industry. It is also critical to support small businesses and other vulnerable sectors of the economy that rely on the banking system for funding and support.

Ultimately, restoring trust and confidence in the banking system will require a concerted effort from all stakeholders, including depositors, borrowers, shareholders, and regulators. By working together, we can ensure that the US banking system remains a stable and reliable source of support for individuals and businesses alike, driving economic growth and prosperity in the years to come.

Did Signature bank collapse?  Sadly the answer is yes. (but the investors money was saved due to timely intervention by the authorities)

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!